Schedule 1 (R&D): a new measure is added to the section on the R&D intensity condition to avoid double-counting in the calculation of total expenditure for the purpose of determining whether the R&D intensity threshold is met (amendments 1 and 2).
New para 17A clarifies eligibility for relief in certain transitional situations, to make sure that only one company can claim where more than one company is involved in the same R&D but where not all of those companies are subject to the new April 2024 regime (amendment 3). This addresses a potential problem where R&D is contracted out to a sub-contractor with a different accounting date. Given that the new rules apply for accounting periods beginning on and after 1 April 2024, this could mean one company is subject to the old rules, but the other to the new rules, for an overlapping period.
Carrie Rutland, Innovation Incentives partner at BDO said: ‘As originally drafted, the draft Finance Bill clauses for the merged R&D scheme would have led to confusion in the transition period where R&D was contracted out to a sub-contractor with a different accounting period.
‘Thankfully, HMRC has listened to feedback from BDO and others and we now have an amendment which clarifies the position – albeit at the 11th hour. This does suggest that the legislation has been rushed and that it might have been more sensible to delay the changes to 1 April 2025’, she added.
Schedule 6 (administration of creative sector reliefs): three amendments are made to the additional information required to accompany claims for relief (amendments 4 to 6). The principal change is to the way in which HMRC will deal with claims that do not include all of the required information, allowing HMRC the flexibility to prescribe the precise detail in regulations. HMRC will also be able to take a more flexible approach where information is incomplete but does not invalidate the entirety of the claim.
New Clause 5 (electricity generator levy: new investment exemption): this proposed new clause introduces an exemption from the electricity generator levy for new generating plant in respect of which no substantive decision to proceed with the project had been made before 22 November 2023 (the date of Autumn Statement 2023). This clause is numbered ‘New Clause 5’ for the purpose of the list of report stage amendments only (ie it will not be clause 5 in the Bill/Act itself).
Schedule 1 (R&D): a new measure is added to the section on the R&D intensity condition to avoid double-counting in the calculation of total expenditure for the purpose of determining whether the R&D intensity threshold is met (amendments 1 and 2).
New para 17A clarifies eligibility for relief in certain transitional situations, to make sure that only one company can claim where more than one company is involved in the same R&D but where not all of those companies are subject to the new April 2024 regime (amendment 3). This addresses a potential problem where R&D is contracted out to a sub-contractor with a different accounting date. Given that the new rules apply for accounting periods beginning on and after 1 April 2024, this could mean one company is subject to the old rules, but the other to the new rules, for an overlapping period.
Carrie Rutland, Innovation Incentives partner at BDO said: ‘As originally drafted, the draft Finance Bill clauses for the merged R&D scheme would have led to confusion in the transition period where R&D was contracted out to a sub-contractor with a different accounting period.
‘Thankfully, HMRC has listened to feedback from BDO and others and we now have an amendment which clarifies the position – albeit at the 11th hour. This does suggest that the legislation has been rushed and that it might have been more sensible to delay the changes to 1 April 2025’, she added.
Schedule 6 (administration of creative sector reliefs): three amendments are made to the additional information required to accompany claims for relief (amendments 4 to 6). The principal change is to the way in which HMRC will deal with claims that do not include all of the required information, allowing HMRC the flexibility to prescribe the precise detail in regulations. HMRC will also be able to take a more flexible approach where information is incomplete but does not invalidate the entirety of the claim.
New Clause 5 (electricity generator levy: new investment exemption): this proposed new clause introduces an exemption from the electricity generator levy for new generating plant in respect of which no substantive decision to proceed with the project had been made before 22 November 2023 (the date of Autumn Statement 2023). This clause is numbered ‘New Clause 5’ for the purpose of the list of report stage amendments only (ie it will not be clause 5 in the Bill/Act itself).
